Why brand loyalty will get you nowhere

If there’s one thing that frustrates me more and more the older I get, it’s money wasting. I’m talking about frittering away funds on things that can be avoided: overpaying on household bills, credit card late fees or paying for subscription services that you just don’t use.
Anthony Justice

If there’s one thing that frustrates me more and more the older I get, it’s money wasting. I’m talking about frittering away funds on things that can be avoided: overpaying on household bills, credit card late fees or paying for subscription services that you just don’t use.

The other thing that really erks me, partly because, like many people, I’ve become something of an eco warrior in recent years, is energy waste. My kids are terrible offenders. I’ll walk into a well-lit room at home with the TV blaring, only to find there’s no one in there. It’s a complete waste of electricity – and money that would be better spent elsewhere.

Where brand loyalty used to be huge, these days I think it’s fair to say we’re not as faithful as we used to be because families can’t afford to be brand loyal these days.

The cost of living is high – electricity prices have been driven up 117% since 2008*, and petrol prices have also steadily increased, leading many households to turn to solar and battery power in a bid to cut costs (and save the planet!).

The thing about loyalty is, it’s not always rewarded.

As the chief executive of uno Home Loans, my team and I have been on a mission to grow the prosperity of Australian households by helping them start, and stay on, a great home loan rate for the whole life of the loan.

Home loans are a great example of where brand loyalty is not always a good thing. For people who have been on the same loan for 5, 10 or 20 years, it’s likely a lot has happened in that time.

The value of their property has probably increased, interest rates have nose dived, and there’s now a whole lot more lenders out there offering competitive rates on home loans.

Yet when it comes to what is most likely their largest outpouring of waste – interest on their home loan – they set and forget, because this is what people have been doing for years and years.

A recent research study we did uncovered that 53 per cent of borrowers don’t know what their current interest rate is (so they don’t know if it’s any good or not) and 59 percent of borrowers have never asked their lender or broker for a better rate since getting their loan.

At uno, we’ve pioneered a way to save you money on your home loan. As an Active Home Loan Manager, we can find and broker the right home loan for your situation; monitor your existing loan and let you know whether it’s still a great rate for you (even if you didn’t get it through us); help you renegotiate with your current bank or lender; and help you make the switch to a new bank or lender, if your current one won’t come to the party.

Last month we helped a client renegotiate from a rate of 3.75% down to 2.90%. They had a balance of $575,000.00 with a term of 27 years and this reduced their total interest payable from $340,222.00 to $254,854.00 for the remainder of the term. That’s a total interest saving of $85,368.00. uno was able to find them a better deal and will continue to monitor their loan and let them know the next time a better deal becomes available.

That couple can now spend their savings on something they really value. I’m all for spending money on items you know you’re going to appreciate – or experiences that create memories, like family holidays or a nice bottle of wine to celebrate a special occasion. For years I’ve coveted a swish pair of brogues, for example, and the other day I finally purchased them. Instead of having to replace my shoes every year, I now have a beautiful and sturdy pair of dress shoes that will last a lifetime.

It’s interesting how we place value on some things and not others. What do you waste money on and what do you value? I’d love to hear your thoughts. And in the meantime, check out uno’s loanScore tool – it’s like a health check for your home loan and only takes two minutes.

It won’t stop you speeding or parking in a no parking zone, and it won’t stop your kids leaving the lights on, but it could save you a great deal of money on your home loan.

Get started here.

Sources

*https://www.abc.net.au/news/2018-07-18/electricity-price-rises-chart-of-the-day/9985300?nw=0

Anthony Justice
* Three year fixed rate, owner occupier, P&I loan with a maximum LVR of 95% and a loan amount >$150,000. Lender rates and products may change. We cannot suggest you remain in or switch to any loan until we complete our assessment. Fees and charges apply. ^ WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rate is calculated on the basis of a loan of $150,000 over a term of 25 years. ± All loan applications are subject to uno assessment and lender approval. uno does not guarantee that it will be able to find a customer a better loan than the one they currently have or to save them money.